• With: Sen. John McCain, R-Ariz.

    NEIL CAVUTO, HOST OF “YOUR WORLD”: One of the catalysts for this, namely us. Consumer spending has been slowing markedly. In fact, in some regions of the country, consumers have just up and shut their wallets even as the government is trying to at least partially close its wallets. It doesn’t appear to be working for consumers.

    And finally the president is saying in the middle of all of this that whatever is done on the debt situation longer term, tax hikes, revenue enhancements, whatever you want to call them, could and should be on the table. That was an immediate concern to some investors who said and thought, wait a minute, didn’t we get this resolved?

    Apparently not. So, some confusion and for the markets and for folks getting out of town here also some worry.

    But a lot of the die-hards just stay on and on and on and refuse to go, including the former Republican presidential candidate John McCain, the esteemed senator from the fine state of Arizona.

    Senator, very good to have you.

    SEN. JOHN MCCAIN, R-ARIZ.: It’s good to see you, Neil. You were in a witness protection program.

    (LAUGHTER) MCCAIN: It’s good to see you here. It’s good to see you here in the city of Satan. We’re trying to do the Lord’s work here. We’re very glad you’re here.

    CAVUTO: Oh, my goodness. Well, it’s been as hot as Satan. I’ll tell you that.

    MCCAIN: Good.

    CAVUTO: What is going on? The deal is done. You signed on to it, grudgingly you had said. But the markets are a whole ‘nother story. Are the markets telling you guys something? Are they just acknowledging that in the middle of this, we’ve got a serious slowdown? What?

    MCCAIN: Look, you’re the expert, so you could probably answer that question a lot better than I can, but I think it’s because its consumer spending, first time in two years it’s been lowered.

    And let me remind you since -- believe it or not, I have such a dull life, I watch you all the time.

    (LAUGHTER)

    CAVUTO: I guess that’s a compliment. I will run with it, Senator.

    (LAUGHTER) MCCAIN: The fact is we control one-third of the government, as you know, the House of Representatives.

    And this committee -- this commission -- this committee that you’ve been talking a lot about is 50/50. Right now, you’ve got an advantage. If you don’t say that everything’s on the table, then, obviously, they start taking things off the table.

    But I guarantee you, six members appointed by our Republican leaders, Boehner and McConnell, are not going to raise taxes. We know what the mandate is -- or that would be off the table. But we didn’t commit to that, because then they would say, OK, then this is off the table and this is off the table.

    CAVUTO: Right.

    MCCAIN: Look, I think that if we did what we did today, in other words, cut spending for every dollar that we increase the debt limit, over 10 years, we would erase the deficit.

    But did we do what we wanted and everything we wanted? Of course not. Did we get everything we wanted? Of course not. But it is the first time that we have seen a reduction in spending. Now, you think a lot of that is imaginary? I think a lot of it’s going to have to do with how it’s implemented.

    And I hope we don’t fool the American people again. I saw a poll today -- you probably saw it -- 84 percent of the American people say that Congress is acting like spoiled children. And 17 percent, I believe it was, said they were behaving as adults. I’ve yet to meet anyone who is in that 17 percent category.

    CAVUTO: Really? Is it that bad?

    (LAUGHTER)

    CAVUTO: I’m wondering, though, it’s this event in November and December, Senator, when this committee, or whatever they’re calling it, has to decide whether it gets to be contentious, whether we could be looking at something like this. What do you think?

    MCCAIN: Yes.

    I think it could be contentious. But I also believe that the people, who will be appointed, particularly by Boehner and McConnell, will be individuals -- for example, one of my candidates -- maybe I shouldn’t say it -- I’m not making decisions, but one of my candidates would be Rob Portman, former head of OMB...

    CAVUTO: Sure.

    MCCAIN: ... a very sober, knowledgeable person. I think those are the kind of people that are going to be on this committee. And I don’t think they want their reputations to be, hey, we met and had a committee meeting and reported out nothing.

    But they will also have fundamental principles that I don’t think they’ll not violate.

    CAVUTO: Do you think we have just gotten a temporary reprieve from the ratings agencies, though, Senator? Fitch Investors was among those saying, well, you know, for now, we like what you’ve done -- I’m just paraphrasing -- but we will come back at the end of August with I guess an updated report card.

    In other words, a downgrade is still possible. And given the $2.1 trillion agreed to, while appreciable, it wasn’t the $4 trillion the rating agencies had wanted.

    MCCAIN: And if I had my way it would be $10 trillion.

    But the point is that -- and in all due respect, the rating agencies, they’re the same ones that told us that everything in the housing market was fine.

    CAVUTO: Fair enough. Fair enough.

    MCCAIN: I think, yes, that’s fair enough.

    But I also respect their view. I think they were going to downgrade us no matter what unless we had enacted one of these huge spending cuts and it was clear we weren’t going to get more spending cuts unless you added tax increases.

    CAVUTO: That is what Mitch McConnell said yesterday, that that was the issue, right?

    (CROSSTALK) CAVUTO: You could’ve gotten up to $4 trillion, but a big chunk of it would have been tax hikes.

    MCCAIN: Sure, if you want to raise taxes.